The Influence of Intellectual Property Rights on Poaching in Manufacturing Outsourcing

The Influence of Intellectual Property Rights on Poaching in Manufacturing Outsourcing Manufacturers are often placing their intellectual property (IP) at risk by outsourcing to suppliers in countries with weak IP rights. Thus, understanding how to safeguard their IP from poaching, which is a supplier's unauthorized use of a buyer's proprietary information, is of critical practical importance for manufacturers that outsource to suppliers in countries with weak IP rights. To investigate this phenomenon, we use dyadic data from globally dispersed manufacturer–supplier relationships to examine how the IP rights of a supplier's location affects poaching and how IP rights influence the effectiveness of two transactional characteristics—supplier idiosyncratic investments and media‐rich communication—on poaching. We examine these two transaction characteristics because they are representative of two forms of safeguards which create self‐enforcing agreements that do not require legal enforcement—economic and relational. We find that the strength of IP rights not only has a direct effect on poaching, but it also influences the relationships for both transaction characteristics. Intriguingly, when IP rights are weak, we find that not only are supplier idiosyncratic investments less effective in reducing poaching, but increases in these investments are associated with an increase in poaching. This finding illustrates that the strength of IP rights is a determinant of the degree to which supplier idiosyncratic investments are transaction specific. For suppliers in countries with weak IP rights, media‐rich communication is found to be more effective in reducing poaching. This finding illustrates the importance of manufacturers’ boundary spanners in building relationships with suppliers in countries with weak IP rights. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Production and Operations Management Wiley

The Influence of Intellectual Property Rights on Poaching in Manufacturing Outsourcing

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Publisher
Wiley Subscription Services, Inc., A Wiley Company
Copyright
© 2018 Production and Operations Management Society
ISSN
1059-1478
eISSN
1937-5956
D.O.I.
10.1111/poms.12813
Publisher site
See Article on Publisher Site

Abstract

Manufacturers are often placing their intellectual property (IP) at risk by outsourcing to suppliers in countries with weak IP rights. Thus, understanding how to safeguard their IP from poaching, which is a supplier's unauthorized use of a buyer's proprietary information, is of critical practical importance for manufacturers that outsource to suppliers in countries with weak IP rights. To investigate this phenomenon, we use dyadic data from globally dispersed manufacturer–supplier relationships to examine how the IP rights of a supplier's location affects poaching and how IP rights influence the effectiveness of two transactional characteristics—supplier idiosyncratic investments and media‐rich communication—on poaching. We examine these two transaction characteristics because they are representative of two forms of safeguards which create self‐enforcing agreements that do not require legal enforcement—economic and relational. We find that the strength of IP rights not only has a direct effect on poaching, but it also influences the relationships for both transaction characteristics. Intriguingly, when IP rights are weak, we find that not only are supplier idiosyncratic investments less effective in reducing poaching, but increases in these investments are associated with an increase in poaching. This finding illustrates that the strength of IP rights is a determinant of the degree to which supplier idiosyncratic investments are transaction specific. For suppliers in countries with weak IP rights, media‐rich communication is found to be more effective in reducing poaching. This finding illustrates the importance of manufacturers’ boundary spanners in building relationships with suppliers in countries with weak IP rights.

Journal

Production and Operations ManagementWiley

Published: Jan 1, 2018

Keywords: ; ; ; ;

References

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